Centre for Public Policy Research (CPPR) is a think tank dedicated to intensive research on economic, social, and political issues.

Saturday, May 07, 2016

Alcohol Prohibition- Future Dilemmas

By Rahul V Kumar*

Two Questions

Prohibition as a public policy is being
experimented once again across states in India. Alcohol prohibition (leading to
complete ban) is a becoming popular political instruments to woo voters. This
is hence the best period to further examine the policy of prohibition itself.
There are two questions. What could be the purpose for prohibiting alcohol?
Will prohibition serve this purpose?

The
answer/s to the first question is ambiguous. There is no single purpose but
health is often highlighted as a concern. This has been more or less fed into
our conscience through scattered bits of information, anecdotes from the lives
of others and a lot of data assembled and collected by the state from its own
retail outlets. The biggest advantage for the government of Kerala is that no
single individual has ever been able to systematically examine the veracity of
these numbers and stories. Chronic cases of addiction are often highlighted as
anecdotal evidences; and individuals feel they have enough evidence in these
cases to know the trouble with alcohol. When the government sets moral agendas
through systematic campaigns and media outreach it becomes all the more
difficult to successfully challenge it. It is notable that the campaign against
liquor is largely run by politicians and government departments.

The
second question at least has historical and theoretical possibilities that
cannot be discounted. Complete prohibition as history proves was always a
gimmick. Alcohol and intoxicants have existed throughout the history of humans
and these trends are highly indicative that it is bound to continue. The
possible reason is that while policy can create shortages, it cannot completely
eliminate demand. The response to shortages has always been to satiate this
demand by accessing new markets. Shortages could also create substitutes.
Kerala is witnessing a mixture of all these responses. If the purpose of
prohibition has to be served, theoretically the state government will have to
dismantle all the departments which were created to coordinate supply of
liquor. This means managing all staff and support services at 22 warehouses and
approximately 338 outlets across the state (several of which have reportedly
been closed). Although the state has announced a strategic plan to reduce size
of its operations, it has largely failed to explain systematically how it would
manage the expenditure associated with rehabilitating workers whose jobs are
threatened.[1]

Future Worries-Some hypotheses

While
these are obvious fallouts requiring attention, what is worth probing is much
deeper. Our experience with government policy on alcohol is that it has had
consequences which were completely unpredicted. And the state is the only
institution that can successfully erode the economy without being answerable to
its conduct. Thinking on the same lines government policy to ban alcohol could
have similar outcomes. It is most likely that we will be unable to predict them
systematically. Milton Friedman’s observation assumes significance here. As he
says “Nothing is so permanent as temporary government programmes”. A ban could
actually create several temporary programmes and departments which could last
forever. Although these could be trivialized as mere hypothesis it is better to
have competing hypothesis to face the policy outcomes. On similar lines we
ought to be wary of a new department coming up to address job losses in the
beverages corporation as much as a programme to educate people on the benefits
of not drinking. Such a growth in state departments and programmes only
strengthens the state even as it should have reduced its size in the context of
prohibiting alcohol.

As
much as it becomes difficult to predict the growth and existence of newer
departments by the state, it becomes equally difficult to predict the course of
the market due to prohibition. Here again we need to hypothesize. Prohibition
will not be easily absorbed by individuals who drink and they too are
significant stakeholders in the state. A possible scenario could be growing
markets to cater to newer issues in health, including a crowding in of
psychologists and counselling workers. Given our education system and
innumerable licenses to practice, providers of undervalued courses could crowd
the scene. To the state this becomes areas of new challenges and possible
avenues to interfere adding to its power kitty. For people it would be further
evidence to blame the worthless markets. But none would be interested to trace
the course of a misjudged government policy for these outcomes-a policy to prohibit
alcohol.

* The Author is Research Consultant at Centre for Public Policy Research. Views are personal and does not present that of CPPR.